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Ok, so for something like the chase sapphire, might make sense to redeem in the portal since you're getting the 25% bonus when doing so. You could transfer but you'd need $.0125 per mile to match that and from my personal experience on united, you're not getting that. maybe that's just a united thing or maybe its just been the flights i've been.
All my Chase points pretty much end up at Hyatt since they cut the main PYB categories I used. Very easy to get better than that value per point at Hyatts.
I've never found it better to use my UR points in the portal vs transferring out to Hyatt or an airline.
Personally, I'm just focusing on airlines since I almost exclusively stay at airbnbs.
The old portal they had a few years ago I had some decent value with, at least with American flights. Heard too many horror stories with the new vendor to give it a try.
If you run across a really good airline fare it can be worth it. I found a great fare a bit back ATL-LIH for $300. With the Reserve I paid ~40,000 pts for a couple seats.
I'm pretty conservative about these things so would really want to be debt free going into retirement. As far as location of funds it comes down to current vs. future rates you'll personally experience. Nothing wrong with spreading the funds out a bit if it looks marginal. And don't forget that if you have the opportunity definitely do Roth conversions after retirement - you want to pay low taxes on those (maybe max out the 12% space) and that will help get you more balanced. Also, depending on your age and how long you have to bridge to eligibility to access retirement accounts you may even want to stock extra monies into taxable.
Thanks Sand!
I don't think there are any magic investments that help you get around RMDs. But the rest of what you said makes sense, it's just running the math to minimize it as much as you can. It's a good problem to have though.
Thanks (and agreed). I was pondering tax free investments but those interest rates are typically pretty low and we're looking 10 to 15 years out before encountering the RMDs and I don't want a lot of money piling up (I think) in those types of investments. I need to take a closer look at our expected tax rates and what might happen if we start maxing the 22% bracket with IRA/401K withdrawals. I am expecting tax rates to only get worse going forward which also is a factor.
the investments don’t matter here. The tax is income, regardless of asset sold.
Im not sure how the age and catch up contributions work but rolling it into a traditional IRA effectively removes your ability to contribute a backdoor Roth IRA.
What Instinctive said. What is the reason you don't want to keep it in the current 401K? Make sure to talk through all your options with the bank/firm that holds the 401K (no need to involve your former company) because they might have self directed brokerage where you can invest it however you want without giving up the advantage of having it in a 401K. And if you get new employment you might be able to roll it into the new 401K.
Also check state law on how protected IRAs are. In my state both IRAs and 401ks are judgment proof, so you can't be sued out of that money. Some states don't offer that level of protection. Just a thought.
I can roll it into my new 401k. I'm just not sure I want to.
My financial guy always has roll into IRA. The reason is basically just a clean break and the IRA is a bit more flexible. (Now this is based off my 401ks). Now by law all your current 401k funds are protected so going out of business is not really a concern since it's not held by your employer.
The advantage is maintaining the ability to do backdoor Roth IRA contributions without pro rate taxation (penalties, more or less). It's a method to get extra money into a Roth IRA, which is among the best possible retirement savings vehicles.
I thought the strategy was to convert to a traditional IRA and then slowly move to a Roth while minimizing the tax on the transfer?
That's just a Roth ladder, which many do once they are in early retirement and taking distributions from 401(k) without other income, and you're just making normal contributions to an IRA that is Roth.
Per person. 401(k)s are individual, employer sponsored accounts.
I meant to ask if my wife could also contribute the max to her employer's plan, not to my account (though we do happen to work for the same employer). Thanks!
Then yes! Just wanted to be clear/helpful as can be. Also thats awesome my wife and I also work at same company!
Every time I feel like I have a good grasp on things, I read something like your post and immediately feel like I know very little.
In #1 you meant "traditional IRA" not "traditional 401k"
If you're up against it I'd just do it backdoor anyway. Doesn't hurt. And I like to get it in as soon as I can, first of the year, invested as soon as possible. If you did that an unexpected raise or bonus could put you over.
Yes and yes. You can max contribute and so can she (and you both can get matches on your contributions and those don’t count towards your max limits - there is another limit for that that hardly anyone ever hits).
Corrected - thanks
I’m intrigued, tell me more.
A small item that might help a little - make sure Roth is 100% stock then invest traditional in whatever gets you to your overall target allocation. Should result in more bonds in the traditional which means smaller balance come RMD time. Basically make Roth max growth.
Rollover usually implies trustee to trustee, so I think that's the right choice. However, I definitely would not chance this due to expensive tax consequences if you get it wrong. I'd call them and tell them what you're doing and get guidance on what exactly to do to make sure it does go trustee to trustee. I've found Fidelity reps to be excellent.
Probably yes due to fees (some plans can be good, though it's rare). There is a link above that goes through legal protections by state on IRAs, which may be worse than 401ks depending on where you are. Also, 401ks have the rule of 55 that may be advantageous, where IRAs are 59.5. Those are the big two items to check on before rolling a traditional 401k to a traditional IRA. There may be more that I'm forgetting.
I’m 99% sure the Rollover IRA is a traditional IRA. I can never recall seeing a Roth labeled a rollover. But Sand is right - call and make sure.
An advantage of rolling it to the new 401k vs IRA is there is a rule of 55 where if you were to retire from the new company you can withdraw 401k funds without penalty. If you roll it to an IRA and decide to retire at 55 you can’t touch it until 59.5
Your company has to have the rule of
I've moved 401k to 401k twice in my career. Didn't really think about an IRA since I didn't want my money split up into separate accounts that I'd have to manage independently.
I understood it as an IRS rule, not plan specific but guess wouldn’t be surprised if that is true. It was my plan to take advantage of this rule but found out my company’s plan doesn’t allow for partial distributions so I don’t know how to use it if that’s the case
